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If you need to quickly borrow money for your growing business, an online lender might be your best option. They can usually get your money to you faster than a traditional bricks-and-mortar bank, and that’s crucial when it comes to covering off expenses and being able to fund growth opportunities. Getting small business loans online can help cover off any cash flow gaps your business might be experiencing faster and often easier than making a trip to the bank.
As part a growing trend in finance, many small business owners and entrepreneurs are now turning to online lenders for money instead of community banks. For those who want to apply for small business loans online, North America is very much a part of this quickening transition.
While small business financing has been limited to in-person applications for decades, today’s financial innovations allow you to get small business loans online with just one click. And reliably so.
Despite stereotypes, most online loan providers run a tight ship, so if you apply with a trusted, verified company, you can rest easy and know you’re in safe hands.
If you’d like to begin exploring your options, start by getting familiarized with the world of alternative finance business loans.
How Fast Can You Get Small Business Loans Online?
No lender offers a personal guarantee that you’ll get what you need to plug a gap in your finances, but online lenders can make a decision much faster than traditional lenders like banks and financial institutions. Online applications take much of the hassle of schlepping to the bank out of the equation, and loan approval is speedier.
For small business funding options in particular, it has been difficult in the past to acquire small business loans from big banks through established processes:
"Many big banks avoid extending credit to small companies because small business loans are time intensive, hard to automate, tough to securitize, and expensive to underwrite and service."
– SCOTT SHANE| Entrepreneur.com
Equally, smaller community banks and credit unions are in rapid decline, which hurts small business further. For a large number of entrepreneurs and startups, these have been the staple provider of traditional loans in the past when there was nowhere else to turn, but now they’re quickly becoming insufficient. In addition to the fact that many of these lenders require a personal guarantee and excellent personal credit scores, community banks may not be the ideal choice for a business loan.
It’s no surprise, then, that small business owners are increasingly turning to alternative lenders for fast small business loans online that attend to their specific situation.
What Documents Do I Need for Online Business Loans?
The documents required for an online business loan will vary from lender to lender, but having some key documents and information at your fingertips will help make the application process smoother and quicker.
- Your business financial statements (profit and loss, income statement, and an outline of your expenses).
- Your personal financial information including the last three years of personal income tax returns.
- Your business license, number, and other details.
- A copy of your business lease (if applicable).
- Your business bank information, including statements for the last three months.
Trusted Small Business Loans Online
A working paper by Karen Gordon Mills (Senior Fellow at Harvard Business School) and Brayden McCarthy called The State of Small Business Lending recognizes that online lending options are growing fast.
They state there is an “emerging, dynamic market of online lenders that are using technology to disrupt the small business lending market,” and loans from these providers come in different shapes and sizes. You can get both short-term loans and long-term loans from online lenders.
Here are a few of the available small business online types of loans you should consider for your business needs:
As the name suggests, P2P lending is about asking your peers, rather than a financial institution, for financial help. “Peers” could be wealthy individuals who like your business model and are willing to invest in it for the sake of humanity, or more than likely, investors who are seeking to make a profit.
The peer match is found online through a platform that’s much like a dating website. The match-making model has proven successful for romance, and online lenders believe it works for financial gain, too.
These matchmaking sites look at more than a basic business credit score, as traditional business lenders have done in the past. They consider many data points to make faster assessments for smaller loans. These platforms typically rely on automated systems and algorithms to assess applicants’ creditworthiness, set loan terms, and determine interest rates.
You’ll have to fill out an application and then different investors will assess your application to decide whether or not they want to fund you. Once your loan is funded, you receive funds that you can then use to cover expenses or take on growth opportunities. Make your payments according to the loan agreement terms and you’re all set.
For many small business owners, their capital is tied up in the business. This can result in cash flow problems and therefore greater difficulty in trying to secure a loan from traditional lenders. This is especially true if they are trying to avoid personal guarantee.
If earnings for your company are steady and growth is predictable, online small business loan providers can often help you overcome a cash flow problem. Ordinarily, this type of small business financing is for growing companies that want to expand into new markets or acquire other assets.
Providing your financial records are healthy, a cash flow lending agreement could see you past the next hurdle to grow your business beyond its current limits. You’ll need to fill out an online application to see if you qualify.
As your small business continues to grow, there may be times when you need a loan and times when you’re swimming in profits. For many, the gap that appears between the black and red on a credit statement can be fleeting and sporadic.
If you need assistance managing this gap swiftly, traditional bank loans won’t do. They’re simply not readily available and flexible enough. Instead, you might want to consider a line of credit.
A line of credit loan means you are essentially given the option to dip into a set loan amount as and when you need it. So long as you don’t cross this line (i.e., spend more than you are allowed to within the terms of the agreement), the balance of the loan can move easily up and down. You only pay interest on the portion of available funding that you use.
By loaning money in this way, online lenders demonstrate their ability to better suit the fluctuating finances that often limit small businesses. A lender may still want to revenue your annual revenue and business credit history in order to approve funding, but because everything’s done online it will still be quicker than visiting a traditional bank.
Various banks and other online lenders will let you apply for a line of credit online. You’ll still have to provide information about your business, just like if you were applying in person, but the process is often expedited compared to a traditional business loans.
The PayPal Business Loan program gives you access to small business loans online with funds transferred as fast as the next business day. You can apply for competitively-priced small business term loans from $5,000 to $100,000 for first-time borrowers and up to $150,000 for repeat borrowers. The PayPal Business Loan program lets you choose repayment terms that are right for your business and repay automatically with predictable weekly payments. Loan terms range from 13 to 52 weeks depending on your eligibility and loan amount. You’ll also have peace of mind knowing that there are no late fees, no early repayment fees, and no processing fees through the PayPal Business Loan program.
Invoice Funding: An Innovative Small Business Loan Online
Invoice factoring is a type of financing where a business owner sells unpaid invoices to a factoring company for fast access to funds. The business owner receives cash for the invoice amount, usually less any fees, ahead of the payment terms. The business owner’s customer, who is responsible for paying the invoice, instead pays the outstanding invoice amount to the factoring company according to the original payment terms. Invoice factoring also goes by the terms accounts receivable factoring or receivable financing. (It’s important to note that this is different from invoice financing, where a factoring company still gives a business owner cash for their invoice, but the business owner pays back the invoice amount themselves, plus a fee. Find out how to choose between invoice factoring vs invoice financing.)
Invoice funding isn’t technically a loan; business owners don’t have to worry about paying the money back because their customer pays the factoring company. But, it’s a great way to free up cash that’s sitting in your accounts receivable for work you’ve already completed. This way you have the cash flow necessary to cover off everyday expenses or go after new businesses, without worrying about how you’re going to pay for things.
The good news is that invoice funding is often more affordable than online business loans, meaning your cost of borrowing fees are less over time. You also don’t have to worry about monthly loan payments — your customer simply pays the factoring company back according to the original terms of the invoice (while you enjoy an upfront cash boost!)
Additionally, your time in business is less a factor in whether or not you’ll qualify, as is the creditworthiness of your customers. You can usually qualify for funding even if you have bad credit or little credit history. And, you can complete the entire process online! As the largest AI-powered invoice funding fintech in North America, FundThrough offers fast, flexible funding that lets you grow your business on your terms.
Stop waiting for payments in 3 simple steps:
1. Get qualified & sign up
See if you qualify and sign up with your Intuit, Open Invoice, or email account in less than 5 minutes.
2. Select invoices
After you provide basic information to verify your identity and business, select the invoice(s) you want to fund.
3. Confirm funding
Upon approval, payment is sent directly to your business bank account.
Put FundThrough to Work for Your Business
FundThrough helps small business owners navigate cash flow hurdles every day. Sign up for a free account — the application process takes just a few minutes to see if you qualify for our innovative online small business funding soultion.